Brussels - The European Commission on Thursday approved plans by Sweden and Portugal to protect financial institutions from the global credit crunch.

Sweden's plan involves the state providing up to 1,500 billion Swedish kronor (201 billion dollars) in debt guarantees to banks and other lenders.

Portugal's plan envisages similar state guarantees worth 20 billion euros (26 billion dollars).

Both schemes were approved by the European Union executive after they were found to be in line with the bloc's rules on state aid.

But while Sweden's was cleared within just three days of it being notified to the commission, the Portuguese plan had to be negotiated with officials in Brussels over a two-week period.

"The Swedish measures were well-designed and needed little alteration to take full account of the state aid rules' requirements that such schemes are non-discriminatory and minimise potential distortions of competition," said Competition Commissioner Neelie Kroes.

The commission has issued clear guidelines on what governments can and cannot do to protect their countries' financial institutions.

Rescue plans have to be limited in time and scope and they should not discriminate against foreign banks operating in the country.

They should also be followed up by structural adjustment measures for the financial sector as a whole, while state money should not be used by beneficiaries to attract new business.

The commission has also cleared similar rescue plans by Britain, Denmark, Germany and Ireland and is still considering those of, among others, France and Spain. (dpa)